1031 exchange from Multifamily Partnership to SFR

[Sanjeev Kaushik]

I have a partnership in a multifamily LLC (2 apartments - 50 units & 20 units) and now we are about to sell the property. Just wondering if I can use 1031 exchange using the proceeds of this sale to buy an SFR. Please share if this is doable and any other helpful link/example.

[Dave Foster]

@Sanjeev Kaushik, "like kind" is not your issue.  Any type of investment real estate can be exchanged in a 1031 into any other type.

You'r problem is that I doubt if you own real estate. You own a membership interest in an LLC that owns real estate. In order for a 1031 to be valid you must be selling and buying actual real estate. The LLC you describe is a typical syndication model. And it is the LLC that owns the real estate not you. So, when the property is sold the LLC could do a 1031 exchange. Because it is selling real estate. But you are not. Because you don't own actual real estate. You're simply being paid off for your membership share.

The exception to this would be if you yourself actually own a tenant in common interest in the MF property.  If so then you can indeed 1031 your % ownership of the actual real estate and purchase new investment real estate.